Reader Mailbag #97

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

What is an appropriate level and kind of gift one should buy for a (great) real estate agent upon completion of the home buying process?
– Pankaj

It’s usually customary for the real estate agent to get you a small gift upon closing your house. This is because the agent usually collects a very nice commission for the work they’ve done in closing your home. Thus, if it were me, I wouldn’t worry about a gift beyond a thank you and a handshake.

However, if you feel your realtor truly has gone far above and beyond the call of duty for you, I would suggest moving into your home, then baking some homemade goods in your new home and delivering them to the agent. No one, after all, can turn down any homemade cookies.

Just to be on the safe side, bring up food allergies in a conversation with your realtor before you do this. You can work it into the conversation in whatever way you feel most comfortable.

How do you manage your “To do”/Task list? Remember the Milk? I’m trying to decide what is the best way to manage my daily/weekly/monthly tasks… I had been using Google Docs but want to move onto Google Calendar so that I can put dates to all my tasks. Anything else I should consider instead?
– Dave

I mostly just use Remember the Milk for things to be done that don’t have a specific time and date attached to the item. If it does have such a time and date, I put it in my calendar instead.

I usually do keep separate lists for my daily, weekly, and monthly tasks so that I can see the individual lists or an overall view of all of the things that need to be done (and when they should be done by) if I so choose.

You’re right about Craigslist being a sort of virtual crapshoot. But if you’re willing to invest a bit of time (setting up RSS feeds can cut down on that, as does good searching), you can get some good stuff at really good prices. (A lot better than wasting time at Salvation Army and Goodwill trolling, that’s for sure!)
– stella

I agree with you that this is the optimal way to use Craigslist, but I still choose not to use it in this way. There are two big reasons for this.

First, it’s a time investment to browse those items each day. The time I spend digging through items is time I could be spent not searching for more stuff to possess.

Second, unless I’m looking for something specific, browsing Craigslist entries is nothing more than a way for me to see things that I didn’t realize I wanted or needed and possibly convince myself to spend money on them. Again, that’s not a positive addition to my life.

Sure, I look at Craigslist if I’m hunting for something. I’ll set up a filtered search and have it show me just those results during the time when I’m looking for a specific item. Beyond that, though, I simply don’t look for “deals” there.

I actually have my first one scheduled for this Thursday. I have a few books of simple sheet music already, along with some other material for reading. I think most of the first lessons will revolve around teaching me very simple songs that will eventually grow toward something more – which is something I’m completely fine with.

I’m a big believer in deliberate practice – and my teacher is aware of this. I told her flat-out that I don’t mind “boring and repetitive” practice in the least as long as I’m aware that it is leading towards something. She told me that was a refreshing attitude.

I’m looking forward to it very much.

On a similar train of thought…

I’ve just started cello lessons and have rented the instrument for $37/month for two months. The music store I rent from will credit me half of the total rental money paid toward a purchase should I decide to do so in the future. The purchase price for a starter cello from them is in the neighborhood of $650.

I could alternately purchase a starter cello online for about $400 (about 10 months of rental cost), but without the rental credit.

If I love it (so far, so good!) and continue to play, at what point in time would it be better to purchase a cello, and from which source?
– heather

My immediate question would be how much resale value a cello would have if you purchased it. If you would have an easy route to re-sell the cello for some significant percentage of what you paid for it, I would buy it sooner rather than later, because money spent on rental is just money lost.

If you would have a hard time selling the cello, I would next look at my own history of sticking with things. Do you have a previous tendency to stick with passions for a long period, or do they burn brightly and flame out? Some people are naturally into variety – they focus on an activity for a while, then want to learn something new. Others tend to bear down on one or two things and seek to master them.

If your personal history shows you in the first group, hold off on buying. If your personal history shows you in the second group, I’d go ahead and pick one up.

I’ve been a reader of The Simple Dollar for years and I have an interesting question for you. I’m about to graduate from [a college] with a degree in computer science. I’ve played baseball every year in college and my coaches and I are pretty sure I’m going to get drafted in June.

My question is this: should I do it? The odds are very much against me making it in professional baseball, but I am pretty sure I can get a job in computer science right after graduation that pays much better than I’ll ever make in the minors. The only way that baseball is the right way for me to go financially is if I make the majors.
– [Ryan]

I edited this question a bit because I was concerned about this person’s privacy, since my research actually indicates that he has at least some professional potential at baseball, and I don’t want to interfere with that and give him the type of publicity that might interfere with his draft status, since his name will probably be Googled by professional teams.

For me, the real issue here would be whether or not Ryan would enjoy playing hundreds of games of baseball a year for the next several years (at least). If that sounds like an extremely enjoyable prospect, then you should go for it, as this is a once in a lifetime opportunity. If that sounds like complete drudgery, just be glad that baseball gave you the scholarship you needed to earn your degree and move into that computer science career.

Unless you are blessed with an inordinate amount of talent, you won’t get to the top level without the kind of burning passion that gets you onto that minor league bus a hundred times a year for several years. Do you have that kind of passion for baseball?

I followed your advice and got an emergency fund with three months’ worth of living expenses in it. I also started saving for a replacement for my current car. Last week, my car’s transmission failed. I took the car in to get it fixed (which cost me $2,500) and the repairman pretty much demanded that I get my brakes fixed, so I shopped around for that and dropped another $700. Now my emergency fund is running dry. Should I just move my car savings over? What should I do?
– Kevin

I would leave my new car savings alone for now. Instead, focus your future savings on rebuilding your emergency fund, then switch back to saving for your next car.

I would treat your car savings as a resource only to be tapped if your entire emergency fund is depleted. If you turn it over to your emergency fund with a self-imposed promise to “start over,” it’s very easy to talk yourself out of such a brave, audacious goal.

Leave your savings where it’s at right now. It will inspire you to keep saving once your emergency fund is back on track.

How do you think people will handle their money differently in ten years?
– Fred

I think the slow death of the paper check will continue. Before too long, all payments will be handled either with a debit or credit card or with cash. Paper checks require too many resources to deal with, particularly when cards are more convenient for both buyer and seller – and cash has the advantage of anonymity, so it’ll stick around.

I think financial management tools are going to get substantially better, but they’re not going to be more widely adopted than they are now. There are a lot of small innovators pushing the 800 pound gorilla (Intuit) forward – and this will keep happening.

I also think that the current frugality trend won’t last. When the economy recovers, people will start spending more again. I would not be surprised at all to see the savings rate go back to zero in five years or so.

What classes did you take in college actually give you value in your life today? Most of my classes seem either to be strongly tied to my field of study or a complete waste of time.
– Jim

My public speaking class had the potential to be valuable if I had taken it more seriously. Instead of really utilizing it to work on my public speaking – a skill I’ve used countless times since college, even though I didn’t expect to – I goofed off and treated it as an easy grade.

My technical writing class has popped up time and time again in various avenues of life. This, of course, could also be connected to the fact that I chose to become a writer.

I also found one class on information management to be really useful. I’m not sure this is a widely offered class, but it mostly focused on how to organize one’s personal information – making a good schedule, filing personal papers so they’re easy to find, organizing data, and so on.

In short, the classes that were useful were the ones that taught transferable skills. When I took them seriously, they were golden.

What’s your Super Bowl prediction? We want it now, in print, so we can see how back your picking skills are (just kidding).
– Eddie

Arizona Cardinals 42, San Diego Chargers 35.

I watched most of the Cardinals game on Sunday on low volume while getting my daughter to take a nap. My conclusion? Kurt Warner is some sort of cyborg. He threw more touchdowns than incomplete passes against an extremely good pass defense and without his best receiver (Boldin). I don’t even know what to say about that.

I don’t believe the Cardinals will lose to anyone if Warner keeps playing like this.

Of course, given my success with such picks, I’d expect both teams to lose next week. After all, I am a Chicago Cubs fan.

Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.

I use Remember The Milk for everything! Tasks, appointments, due dates… I use the Remember The Milk add-on in Gmail so I can always see what is upcoming. I also have tasks emailed to me the day of. I don’t mind not having a traditional calendar to look at. I prefer it’s simplicity to that of Google Calendar.

What I do use Google Calendar for are our house chores. It is shared with all of the roomates and lists every day who’s turn it is to do what. That way there can be no excuses!

about the car repair question-you must live in a high cost area or have an exotic make of vehicle. Brakes at $700! New brakes at an auto parts store would run about 80 to 150 for four wheels. Please shop around a little more before you have anything else done to your vehicle. Also, did they show you what was wrong with the brakes? If not, you need a new mechanic.

@Ryan
Go for it man, If you love baseball, making more money shouldn’t matter. If you end up washing out computer science, or the opportunity to pursue a masters degree will always be there, you will only be able to follow a physical dream once (not getting any younger) I passed on an opportunity to sail professionally (tall ships around the world) after high school because I thought college and a steady job would be a smarter move, true, but college didnt go anywhere, if I had started my degree a few years later it would have only meant I was more mature, and I missed the opportunity of a lifetime in the process.

To the aspiring cellist: I’m a violin player, and $650 seems awfully cheap for a decent stringed instrument. I think if you’re going to stick with it, you should invest in a quality instrument that will appreciate in value, and DEFINITELY play before buying. Each instrument has a unique character and you want to get one with a tone you really love, it will make playing that much more enjoyable.

Exactly what I was going to say. Unless the thought of playing minor league ball and the associated low wages and lousy travel/living conditions is just completely repulsive to Ryan, I really hope he gives it a go. Barring a freak injury, what’s the worst that happens? He washes out in a season or three and has a great “hook” for breaking the ice in future conversations.

Heck, for that matter, since the economy’s not so hot still, why go through a job search when the job will come to him if he gets drafted? ;-)

My parents bought their real estate agent a gps unit because she was always having trouble finding the places she was trying to show them (out in the country). She showed them 10+ houses and reshowed them before they finally settled on something. Obviously you don’t have to spend a whole lot of money on a gift. I just wanted to let you know you aren’t the only one that has thought about it

As for piano exercises that are repetitive and have significant value, I highly recommend Hanon. It is a classic book. There is a present day version (ISBN-13: 978-0739017333). Of course, your teacher can decide what you need to do, but I am in love with Hanon. It is great for exercising both hands and all ten fingers equally, practicing consistent tempo, and using as a warm up.

I also just had the brilliant idea that maybe you can get some of your piano books off of paperbackswap. Maybe not, but definitely worth checking out. Of course, you’ve probably already thought about that.

“I also think that the current frugality trend won’t last. When the economy recovers, people will start spending more again. I would not be surprised at all to see the savings rate go back to zero in five years or so”.

Sadly, I think you’re right about that, Trent. That’s why I was concerned to learn that you had left your job in the “professional world” to stay home to write a PF blog and become an author of PF books(so far).

DH and I are old enough (he’s 60, I’m 52) that we’ve seen at least 2 major “frugality/green movement” waves in our adult lifetimes. The majority of Americans are spoiled or have short memories – or both. While there will always be a remnant of Americans who live frugal, ecologically responsible lives, I’m afraid that most of us will be back to “Spend, Spend, Spend!” as soon as the recession is declared officially “Over”, and they feel they can afford to splurge. I have a friend whose favorite line is “I work hard; I DESERVE to treat myself!”, and I fear this type of thinking is the norm in our country rather than the exception.

Trent, have you thought ahead to when things are declared “better” financially in our country, as to what you will do if the interest in frugality/PF just isn’t enough to sell books or return a decent revenue on your blog? I really like your writing style, and would LOVE to see you start a blog someday detailing your journey into a personal adventure in cooking!

For Ryan, Regret goes both ways, sometimes you regret NOT doing something more than what you did. I had some opportunities when I was younger but took the expected route, job etc. Now, when I have the freedom and the $, I am not able to physically. You must have liked baseball a little bit if you were able to get a college scholarship! Coaches can tell who has enough passion as well as talent. For a better idea of what happens after the draft etc. see if you can get with some former players of all ages and see what they have to say. I say all ages because the newer ones might be really angry/happy or the older ones might have romanticized their experiences by now, ‘the good old days’ kind of memories.

I love the Superbowl prediction! My husband is the biggest Cardinals fan – he was on pins and needles during the entire second half. And yes, Warner is amazing! He and Coach Wisenhunt are the best things to have happened to the team in a long time.

I have two for the college classes, not related to my major, with best real life value:
1. World Geography Survey – I was amazed, being a straight-A student, how little I actually knew about where places are, and how their location, topography, and climate influences culture and conflicts, etc. Completely changed how I understand current events and history.
2. Statistics for the Social Sciences – as I’ve heard other people say, if you take this class you will never believe a single stat in a fluff news article again. Absolutely great for understanding where these numbers come from and for developing a good b.s. detector.

For college classes, I would also encourage a student to look into intro classes in fields that your school specializes in. I went to a school with a really good Ag program and a Vet school, but neither of those were my field of study. Two of my favorite classes were a gardening class (tailored to home gardeners with hands-on labs–growing things) and an animal husbandry class. The level of the instructors was high since it was a focus of the school.

For Ryan – There were a few opportunities in my life that I passed up because I was trying to be responsible or make the best “lifeview” decision, but I often think of what might have been if I’d made a different decision. While I applaud responsibility, and accepting reality, I also think you have been presented an opportunity many people dream of but very few are offered. My advice would be to try a professional baseball career. The funny thing about odds is that they can go either way.

However, the fact that you actually asked this question at all leads me to wonder if you are looking for a way out of a baseball career. If this is the case, you should listen to whatever your gut tells you. If you are just worried about failing, that will happen in life no matter what decisions you make, failing is just a part of it.

I’ll bet when you are 60 years old, reminiscing with your grandkids, you will never talk about how you missed out on a few very valuable years working with computers, but you might look upon your days trying to be a major league player with some fondness.

My girls are both string instrument players (cello and violin) and a letter comes home every year from the orchestra director tellin us parents to NEVER EVER buy an instrument online. Check around for a good strings dealer in your area (call a local college with an orchestra)and play it first. Also, a good store will let you borrow an instrument for a week or so and you can take it to your tutor for approval. It really will be better in the long run…buying an instrument isn’t like buying a piece of furniture.

@kat — The brake job could have needed pads as well as rotors/drums. That can easily hit $4-500, depending on make and model of the vehicle. Then add in 2-3 hours labor, shop supplies, maybe even a fluid replacement and you have a $700 brake job. Also if it had gone too long, caliper damage could have occurred, too.

FWIW my last DIY brake job was $320 for parts (front/rear discs, front/rear pads) and the job took 3 hours to complete. I’m not a professional mechanic, but this is the third time I’ve done the job on this car, so it goes pretty quick.

For the baseball player “Ryan” – I am an avid baseball fan, in particular an avid minor league fan. I probably attend close to 70 games a year in different cities and levels. Being a minor league player is a rough job – you don’t eat well, you are on a bus all the time, you don’t even know what day of the week it is most of the time. But if I had the chance to play a professional sport (at any level) I’d give it a shot. Odds are you won’t make the Majors – then again stranger things have happened. Mike Piazza was drafted in the 62nd round as a favor from Tommy Lasorda to the Piazza family. No way was this chubby catcher supposed to see the Majors, now he’s likely headed to the Hall. Sign with the team that drafts you and save your signing bonus – you’ll need the money. Then go to Spring training (or Roookie or Fall ball) and work your butt off. I think you’ll have a good idea of where you are headed professionally – you might want to stay for a second season and you might decide to hang up the cleats.

There are a lot of good reasons to not play baseball – time away from family/spouse/children is a good one. But, to me, money is not a good reason to at least give it a shot for one year. I really think you’ll regret it as you get older if you don’t give it a shot now. I recommend you read Odd Man Out about a lefty relief pitcher from Yale who played one season in rookie ball and hung up his cleats for med school. I think its clear he has no regrets at all.

And if you are in Spring Training in Florida, Appy League or South Atlantic League ball I’ll likely run into you. Good luck!

On the reator question, my dad was a realtor and one of his clients let us use their cabin for a week of camping one summer. It was really nice. I always thought it was just because they were thankful for my Dad being a good realtor. I don’t know of anyone else giving im gifts of appreciation, but that one stuck out to me.

>How do you think people will handle their money >differently in ten years?

I agree paper checks need to go, but there also need to be a better system for transferring money between individuals. Possibly an ETF between cell phones- I’ve read articles where cell phone minutes are used as currency in some countries where there currency is untrusted.

I’m sure the frugality trend won’t last- no trends do… still at least it isn’t a harmful trend.

If the savings rates include retirees then they will definitely go to zero in a few years even if people remain frugal as more baby boomers will retire.

I hope we see some security improvements: Why is it still so easy for identity thieves to open accounts in other people’s names? Why isn’t there at least a hidden PIN# to use credit cards?

Here is something pretty different: How about peer-to-peer credit cards? Instead of borrowing from a bank have a CC that links to a peer to peer site. Let the market decide rates instead of some bank, and let me loan money to the non-frugal for their CC balances :-).

I’ve noticed that so much of your PF advice is not about what to do with your money but what to do with your life. And I’ve noticed that I’ve really started to internalize that sort of advice. I think that puts you a cut above the other PF bloggers out there. So I just wanted to say thank you.

About the useful college classes — I would argue that any class that teaches you to read and digest large amounts of information teaches you a transferable skill, no matter what that information itself happened to be. Ditto for anythign that emphasizes writing skills.

I’m pretty sure when Kevin wrote “brakes” he meant the rotors. That’s the only reason I can think of that a repair person would “insist” that they be done right away (by someone else, so he wasn’t just trying to get more money out of you himself). Once you have metal on metal you’re doing real damage. And rotors have always been a $700 job no matter what car I’ve owned or where I’ve gone. Our current car has had new rotors twice in 8 years. Sigh.

So my automotive tip for the day would be to get the brake pads done regularly even though you can’t afford $100 to $200. You won’t be able to afford $700 two or 3 months from now either but you won’t have a choice!

Ryan should try the baseball gig for a while and see where it goes. I assume he enjoys playing baseball and would enjoy a shot at playing professionally. No harm in trying it for a couple years and see how he likes it and where it goes. The job in computer science can wait. And don’t assume you can get a job in comp sci field with unemployment at 10%.

If you don’t try the baseball gig then you might look back the rest of your life wondering what could have been.

Regarding Heather’s cello, it’s not necessarily worth it to buy a “starter.” The quality of your instrument directly influences the quality of your sound. Starter cellos I’ve played on have been… less than optimal.

So…

1) Find out about their trade-up policy. Some stores will buy back your old instrument when you buy a new one. If your store does this, I’d take less issue with buying the starter.
2) As Sandy (comment 17) said, be sure to play several cellos at several price ranges first before deciding.

Another point to consider budget-wise: does the cello you buy come with a case, bow, strings, rosin, etc. that come with the instrument? Does this differ from what you were renting? And are these quality items?

From what I have followed about the economy I do not think it will recover for a good 10-20 years. In fact, I don’t see real estate ever being worth what it was before the crash for the rest of my life. We gave yet to see what happens when the alt ARMs adjust starting this year. So, I think we will mostly turn into a nation of baggie rinsers/tp counters. Unless of course a change happens that ousts the two major parties and the libertarians take the helm.

Re: question #1 (real estate gift):
Two things:
1) Handmade gifts are very nice. A bottle of wine if they drink it would also be appropriate. You could also ask them for several of their cards as you would like to refer people to them and then work ardently to refer people. That would be the gift that keeps on giving.
2) In response to Trent’s statement: “This is because the agent usually collects a very nice commission for the work they’ve done in closing your home.” Unless you live somewhere with inflated house prices, your real estate agent is likely an independent contractor and pays for everything out of pocket. So even though it may appear that the agent collects a very nice commission, that commission goes back to the broker, to supplying the agent’s own health insurance, to paying for fees & licensing, etc. You can assume your agent only receives about 50-70% of the net commission and then taxes come out of that too!

The question you have posed here is actually best posed to your private teacher. S/he knows your abilities and goals better than anyone besides you, and can help you make an educated decision. Beyond that, your teacher should have strong connections to people who sell high quality used instruments and can help you get the best quality for the best price.

That said, if you are dedicated to your practice, there is no reason to buy an inferior instrument. Quality instruments have great resale value. If you’re interested in buying a used instrument from a private seller (i.e. ebay, Craigslist…), have your teacher and other experienced cellists try the instrument before you buy it.

I am a bassoonist, and my instrument was possibly the most important purchase I’ve ever made. You spend so much time with your instrument. It can build your career or help you along spiritually. A quality instrument means the difference between hours of frustration in the practice room and hours of growth. It is an investment that is worth your time in research and there are so many more factors to consider than the immediate cost.

When I invest in mutual funds and when I purchase CDs, how do I classify them? Should I think of them as an expense? When the CDs mature, should I classify it as income even though it was income before I converted it into CD?

Just to add on, no one will care if you’re a CS grad with no experience at age 22 or 30, and minor league baseball should provide some great stories to fill the gap. If you do stick it out a few years and decide to fall back on the degree, I’d suggest getting a cert or contributing to an open source project before you start interviewing – just to show you have an interest in the continuous learning a CS job requires. Good luck!

My favorite college experience involved two courses that were not at all practical for me. My roommate was an engineering major, and he kidded me that as an English major I’d never be able to handle “real” classes like Calculus. Another friend told me the same thing about Organic Chemistry.

I had never been very good at math or science, but just to prove I could handle anything I put my mind to, I signed up for Calculus and Organic Chemistry in the same semester, just for “fun.” I have never worked so hard at anything in my life since, but out of sheer determination I ended up with a B in both courses.

It almost killed me, but I think back on that as a great semester. No practical application, but just putting your mind through mental “boot camp” can give you confidence for all kinds of tasks. I am a teacher now, and when I face piles of papers to grade, I always tell myself, “Relax, you can handle this. Remember you’ve taken calculus and organic chemistry. You can do anything.”

Realtor gift question — How about references? That was our gift to our wonderful realtor who helped us find our house. We got a bunch of her business cards & for years afterwards, whenever we heard someone was in the market for a house, we handed them her card.

To the cellist — check craigslist. I want to start playing the violin again after 12 years, and I was able to buy a low-quality, but perfectly serviceable violin for under $100. It seems that people are trying to de-clutter after new years day.

Trent — I would love to hear your thoughts on frugality and discouragement. This past week, I have felt like everything I try to do frugally just backfires. I hung my sheets over the shower rod instead of putting them in the dryer — and it turns out the top of the shower rod was dirty. I bought generic razor blade refills after making sure they would fit my razor — but I was wrong and they don’t. I chose not to buy monthly parking in my office building for $80, promising myself that I would get to work early enough to get a free parking spot — and then I was running late for work one day, parked at a meter, completely forgot about it, and ended up with TWO $40 parking tickets!

Honestly, it just makes me feel stupid and depressed — it makes me feel like it’s not worth it to try to be frugal because I’m just going to screw it up. Do you ever deal with this kind of discouragement? And how do you overcome it?

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